Investments
Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 14, Problem 3PS
Summary Introduction

To determine:

The reason for zero-coupon bonds to have an equal stated yield to maturity and realized compound yield to maturity

Introduction:

A contract that is made between the issuer and the investor allowing the issuer to borrow some money from the investor at certain predetermined terms is called as debt security. Bonds are debt securities, which are given with a borrowing arrangement. These promise to provide the investor some income. This income could be fixed income or an income which is calculated as per a formula. Fixed income securities is another term used for Debt securities. Over a certain period of time, the issuer is obliged to make specific payments to the holder in this type of securities.

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